Oil higher, gold softens

Oil
Crude prices rose as a tight oil market was going to remain in place given the start of the summer driving season was going to keep a downward trajectory for US stockpiles.  The EU is struggling to get Hungary on board for the required unanimous support needed for a ban on Russian oil.  It still seems possible for the ban to get pushed through, but Hungary will need to have favorable terms.
The gains for crude were limited as China’s Premier Li Keqiang delivered a downbeat outlook given the current struggles with COVID.  The crude demand outlook has a lot of uncertainty from China, but the US is still looking good.  The latest round of US data suggest the economy is decelerating but the consumer is still spending and probably will be traveling a lot this summer.  Personal consumption rose more than expected and jobless claims improved, which counters calls that the labor market was weakening.
Until a major update occurs with either the EU proposed ban on Russian oil or China’s COVID lockdown situation, WTI crude looks like it wants to take a nap between USD 109 and USD 112 range.
Gold edges lower on higher risk appetite
Gold prices edged lower as risk appetite attempted a return to stocks following solid retail earnings outlooks, damaging demand for safe-havens.  Gold has been supported on expectations that the Fed won’t be as aggressive with tightening monetary policy as some had feared.  Gold traders are looking to see if the near two-week dollar pullback is over.  A peak in Treasury yields has been put in place, but it seems unlikely that the 10-year Treasury yield will significantly weaken from here.
Wall Street will wait to see what happens with inflation over the next couple of months and that could mean that gold might be ready for a short-term consolidation phase, with the USD 1839 providing initial support and USD 1870 being the ceiling.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya